Published 8 October 2006
The receivers of National Finance 2000 Ltd (director Allan Ludlow), PricewaterhouseCoopers partners Colin McCloy & John Waller, said on Friday they’d sold the National Finance loan book to a party associated with the listed Cynotech Holdings Ltd, whose chairman is former Equiticorp boss Allan Hawkins.
The $7.7 million purchase price has been paid in full after Cynotech carried out due diligence, but it needs to hold a shareholders’ meeting because the sum makes this a major transaction. Cynotech will post its notice of meeting on Friday 3 November and hold the meeting on Wednesday 6 December.
The receivables being acquired include the standard finance company loans of National Finance including:
loan accounts being paid currently
overdue loan accounts, and
salvage accounts & loans previously considered to be uncollectible.
Cynotech said: “The consideration payable has been arrived at after the conduct of a due diligence exercise on the loan accounts, including an assessment of the collectability of loans in each category. Realistically the full face value of the loan book will not be collectable and the consideration being paid reflects that. Cynotech has an experienced finance company & debt collection team, which is expected to be able to maximise the value of the loan receivables.”
The receivables are being held under a third-party arrangement until shareholder approval is received.
Mr McCloy said his receivership team was now in a position to make a partial repayment to some investors. “We plan to pay an initial dividend of 30% to secured debentureholders next week,” he said.
The receivers were continuing to realise National Finance’s remaining assets. Mr McCloy said secured debentureholders could recover 40-45% of their original investment once that process was completed.
“This is at the higher end of the 30-50% scale that we had estimated in June. Regretfully the position for subordinated investors has not changed from our position in June, and they will not recover anything from the assets in receivership.”
The receivers entered 6 of Mr Ludlow’s companies on 9-10 May – Great North Management Ltd, National Finance 2000 Ltd, Payless Cars Ltd, Payless Cars (North Shore) Ltd, Payless Cars (Ormiston) Ltd, Payless Cars (Papakura) Ltd.
U column part 2, 28 May 2006: Handful of National Finance investors get money back now
Attribution: PWC release, Cynotech statement, story written by Bob Dey for this website.